Daily Report 311214 2014-12-31
Macro Economy
The US stock market fell yesterday, and technology and utilities got the biggest drop among 18 months. Former S&P 500 index closed by broke the record for the 53rd time this year. October’s S&P/Case-Shiller index increased 4.5% than last year, which is the lowest increase rate in recent two years. Statistics from the Conference Board showed that the consumer confidence index rose from 91 last month to 92.6 this month, indicating potential consumption recovery. The European Central Bank’s (ECB) chief economist Peter Praet said that current inflation was super vulnerable as expected, and the inflation rate would lower than 0 in a long term. Simultaneously, he implied the need of comprehensive QE and the concern of Greece election.
As for domestic market, the finance minister Jiwei Lou declared on the National Financial Work Conference held from 29th to 30th December, the Chinese government, in the following year, would engage in implementing active monetary policies and reinforce the policies; keep the economy running among a rational interval. He also emphasized the critical role of investments in economic growth; it is estimated that infrastructure would contribute to steady growth. Besides, December’s HSBC Manufacturing PMI, Official Manufacturing PMI and Non-official Manufacturing PMI will be announced at today’s 9.45 a.m., tomorrow’s 9.00 a.m. and 9.00 a.m. on 3rd January. The Official Manufacturing PMI is predicted to reach the critical point due to economic pressure, needs to be concerned.
Overnight US soybean closed down after a series of shocks. The US market is expected to be volatile during the incoming New Year’s holiday. Demand and supply are basically stable. Soybeans are growing well in South American producing area. Although soybean sowing in Argentina is close to the end, droughts in some areas need concerns. In the short term, active US soybean contracts would wobble between 1,000 cent and 1,050 cent as estimated, pay attention to demand and supply reports of this month and January. The DCE soybean No. 1 1501 contracts continued position cutting, both long and short positions are fighting for the last minute. the spot was weak in some areas. Similarly, the 1505 contract restrained its strong trend. DCE soymeal spot lowered the quoted price, specifically, Shandong Province, Zhejiang Province, Jiangsu Province, Guangxi Province and Guangdong Province readjusted spot prices into below RMB 3,200 per ton. And there are no sign of short-term rebound pressured by the weakness of the spot. It is suggested to short DCE soymeal in high prices, and wait for changes of soybean No.1.
The PP futures wallowed yesterday. For the upstream, propylene rebounded last night, FOB Korea propylene surged $20 and averaged at $660.5 per ton. For the device, overhaul is normal at the status quo, no signs of maintenance. For the spot, the PP prices of most markets consolidated narrowly yesterday, part of those markets went through an RMB 50-200 per ton price fallback. Part of main petrochemical regions lowered factory prices, pushed source costs continued to drop. The PP futures opened low and went up, but had limited effect on market mentality. Most merchants actively participate in shipments; firm offers were mainly on sale. Downstream manufacturers showed little willingness on receiving goods, trading is primarily rigid demand. Quoted prices of wires was RMB 8,900-9,400 per ton in North China markets, RMB 9,200-9,600 per ton in East China markets, and RMB 9,600-9,750 per ton in South China markets. As a whole, prices are lying in early stage of wobble, and are likely to keep wallowing before the New Year’s Day. Thus, it is suggested to wait.
                                                                                      Dong LV (Investment Certificate NO. TZ008452)